Bachelor thesis
Work and Organizational Psychology
-Leader-member exchange and employees’ behavior -
How does satisfaction with HR practices
influence affective commitment and innovative behavior?
Student:Susanne M. Siep (s0118796)
Faculty: Behavioral Sciences
Psychology
University of Twente
First tutor: Moorkamp, M. Msc.
Second tutor: Prof. Dr. K. Sanders
Date: February 2008
Table of contents
1. Introductionpage 3
1.1 Theoretical relevance page 5
1.2 Practical relevance page 6
2. Theoretical framework and hypothesespage 6
2.1 Model of this study (Figure A) page 12
3. Methodpage 13
3.1 Respondents page 13
3.2. Instruments page 13
3.3 Data- analysis page 15
4. Resultspage 15
5.1 Discussionand conclusions page 16
5.2 Limitations of this study and
further implications page 18
References page 21
Tables page 25
Table 1 Means, standard deviations and correlations
of the research variablespage 25
Table 2 Regression analysis with affective commitment
as dependent variable page 26
Table 3 Regression analysis with innovative behavior
as dependent variable page 27
Abstract
This study aims to identify and measure variables that could have a possible impact on employees’ work-related outcomes to get a clearer view into the processes that influence employees’ behavior. This work- behavior among other things can be seen as a very important factor for organizations to stay competitive.
This study in particular aims to examine the relationships between Leader- member exchange (LMX) on the one hand and affective commitment to the organization and innovative behavior of the employee on the other hand. There have also been tests for a possible moderating effect of employees’ satisfaction with Human Resource (HR) practices that are used by their organizations.
Next to LMX affective commitment to the organization, innovative behavior of the employees and the possible moderating effect of satisfaction with the used HR practices, we controlled for age, gender, highest school examination, type of contract, department, martial status and perpetual or temporary engagement.
This work is based upon the data of 151 employed people in the technical service sector of 3 organizations with more than 100 employees in West-Germany. There were 46 women and 105 men taking part in the study and the mean age was 25-35 years. The questioned people were averaged employed for about 2-5 years. 146 respondents are German, 4 are Dutch and 1 is Russian.
Using the received data it can be seen that LMX is an important predictor for employees’ affective commitment to their organizations and their innovative behavior.
In contrast the hypothesized moderating effect of employees’ satisfaction with HR practices on the relation between LMX and affective commitment as well as on the relation between LMX and innovative behavior could not be confirmed.
1. Introduction
Somebody’s work plays an important role in his or her life and this almost for a period of forty years. Work has to do with daily processes, searching and finding a job, moving upward in an organization, training, evaluation and education of your personal way of working and dealing with related factors (London, 1983). Thus, work influences our life for a great part and we are almost always busy with finding a(right) job, doing it as good as possible and reaching personal goals (George & Jones, 2007).
But the organizations’ goals and values we work for are quite as important as our personal ones. The goals an organization aims to reach, e.g. staying competitive and reaching higher outcomes, are influenced by employees’ behavior, emotions and feelings for such a great part that it becomes more and more important to think about an adequate and improved job situation through implementing an effective human resource strategy, thatis used to manage all factors influencing work and employees’ behavior (Boxall & Purcell, 2000; Paauwe, 2004).
The main interest that is influenced by the relation between the employees and the organization they work for is the impact human resource management has on the performance of the employees and therefore on the whole organization. Performance in this sense means, that organizations have to reach particular goals, first and foremost reaching sustainable competitive advantages towards opponents or antagonists (Paauwe, 2004). Competitive advantages are strongly related to human resource (HR) strategies; trying to achieve a fit between organizational and environmental determinants, or developing a way of action to achieve organization’s purposes (de Wit and Meyer, 1998 in: Paauwe, 2004). Huselid (1995) claimed that more advanced high performance work practices imply a significant growth in market value and sales per employee. The need for an adequate management of people to achieve competitive advantages is now clear and will further be defined and explained in this study.
The relation between human resource management and its practices and the performance of the organization is for a great part determined by the employees’ acceptance and satisfaction the used strategies. Kinnie, Hutchinson, Purcell, Rayton & Swart (2005) stated that there is a critical question related to HR practices and their impact on satisfaction of the employees. They stated that there might be different needs and that employees respond in a different way to HR practices as reflected in their affective organizational commitment. Therefore it is necessary to take a look at the implemented HR practices and employees’ reactions on them. Lee and Park (2007) stated that these reactions are determined for a great part by the leaders and their responsibility of implementation of the HR practices.
Satisfaction with HR practices is therefore in turn related to the relation an employee has with his or her supervisor. This relationship is well described in the model ofLeader- member exchange (LMX) that posits that the behavior of leaders in an organization is not necessarily consistent across all subordinates (Lee & Park, 2007). Those subordinates having a high level of LMX with his or her supervisor have reciprocal respect, influence, liking, mutual trust and high exchange of informal information and feedback with their supervisor. For example Hooper & Martin (2008) investigated research if perceptions of the variability of LMX (extend to which members perceive LMX relationships varying within a team) has an effect on the employees’ satisfaction and wellbeing beyond the effects of the personal LMX quality. Their results showed a significant accountancy of perceived LMX variability for additional variance in employees’ outcomes. While personal LMX quality was a strong predictor of employee reactions, perceived LMX variability was also related to global and extrinsic employee job satisfaction and wellbeing. Perceptions of LMX variability associate with higher reports of team conflict, which was related to lower levels of employees’ job satisfaction and wellbeing.
One main aspect of creating competitive advantages is the organization’s ability to be innovative and motivate and encourage employees’ innovative behavior. Being innovative is also determined by the satisfaction with HR practices and the way of leading employees (e.g.,Shipton, West, Dawson, Birdi and Patterson, 2006). Bolwijn and Kumpe (1990) emphasized the importance of innovative behavior in an organization. They defined its creation as “a climate that requires openness, leaving scope for the imagination, while innovation must be strictly controlled” (Bolwijn & Kumpe, 1990, p.52). They stated that it is absolutely necessary to be able to estimate the side effects of all sorts of innovation. They characterized innovative organizations as firms that are “able to co-ordinate technological developments, applicable in separate business units“(Bolwijn & Kumpe, 1990, p.52). Therefore innovation cannot be seen just as a conception of new ideas nor the development of a new market. The process includes all of these facets acting together in an incorporated manner (Myers & Marquis, 1969).
Another factor predicting for or included in the organizational performance is employees’ affective commitment to the firms they work for. Boxall and Purcell (2000) emphasize the importance of an emotional binding to the organization somebody works for as being determining for the satisfaction with leadership and overall work performance.Human resource strategy is associated with the great number of cases in which management is trying to follow up performance goals through lower levels of attachment or is seeking to manage a sophisticated, segmented workforce through varying levels of affective commitment (Boxall & Purcell, 2000). Affective commitment is defined as a personal feeling, existing when employees are happy to be a member of the organization, believe in and feel good about the organization and what it stands for, are attached to it and intend to do what is good for the organization. Thus trying to improve, support and boost organizational performance (George & Jones, 2007).
This descriptions result in the followingresearch-questions: “What might influence employees’ behavior in an organization?”,and “How does the kind of relation with the supervisors influence the various levels of the employees’ performance- behavior, especially affective commitment and innovative work- behavior?”, or “What can be done to improve organizations’ effectiveness throughtheir used HR practices?”
The goal of this study for organizations shouldtherefore be an answer to the question “What can be done to accomplish sustainable competitive advantages by using adaptive and effective HR strategies?” This will be done by analyzing the named factors and their mechanisms on each other.The leading research question of this study is therefore: “What is the impact of leader-member-exchange and employees’ satisfaction with HR practices on affective commitment and innovative behavior?” The resulting proposal based upon the hypotheses will be advising for organizations and may help to improve to use effective HR strategies, satisfy employees and reach internal goals through achieving a sustainable competitive strategy.
1.1 Theoretical relevance
There are a lot of studies highlighting the relevance for organizations to think about these factors and the organizations’ actions in making their employees satisfied and productive in order to stay competitive (Bolwijn & Kumpe, 1990; Paauwe, 2004). This study aims to find underlying mechanisms and their influence on employees’ and organizations’ outcomes. It tries to deliver a contribution to the existing theoretical knowledge and therefore to broaden useful ways of dealing with job related factors and their impact on employees’ behavior. The research question in this study and the leading relations we are interested in might deliver a part to the existing theoretical findings and further tries to explain and describe what the relations between the named terms are. This might turn into help to improve actual and present factors dealing with the question of managing an adequate HR strategy to result in an organizational competitive state. This study is important for research to get a wider and better understanding of what earlier research has found and will lead to a better insight in theoretical approximation in this field.
1.2 Practical relevance
For organizations thinking about the improvement of their situation, this research results in suggestions to help reaching their goals concerning affective commitment of the employees, innovative behaviorand consequently a way to improve performance. This study aims to enable to take conclusions about the current situation in the organizations taking part and giving them advices to implement and improve their strategies by understanding the underlying mechanisms that influence their employees’ behavior and resulting outcomes. Improving the work-situation and reaching organizational goals can be supported by this research through receiving information about facts and constructive suggestions to reach competitive advantages towards opponents or antagonists in the end.
Also organizations might get a clearer understanding of the variables affecting their performance and the behavior of their employees. As already described staying competitive is strongly related to the inner organizational performance and it is therefore important to work with these factors and the related variables. Organizations should take care about what their employees think and how they behave because of resulting sales-behavior and competition with other organizations.
Thus being advising for organizations through analyzing and explaining the relationships between the named work- related factors and therefore enabling them to use strategies more effective through adaptive implemented HR practices is the main practical point in this research.
2. Theoretical framework and hypotheses
To build up the hypotheses and test the underlying effects of the variables on each other it is necessary to take a look at earlier research and the findings in this field. Some relationships are already described and tested and their effects have been used for practical implications. We will now take a look at the relationships and the subdivisions of the different variables to set them into new hypothesized relations and afterwards test their mechanisms on each other.
Because leaders are responsible for the implementation of the HR practices for such a great part (Shipton et al. 2006; George & Jones, 2007) we are interested in the consequence of the relation between supervisor and employee. Many factors defining this relationship result in dissatisfaction or satisfaction of the employee, productivity-related behavior and the personal attitude about the organization and the job itself (Laschinger, Purdy & Almost, 2007; Lee, H.E., Lee, T.S., Lee, D.W. & Park, 2007).
One explanation for the relationship between supervisor and employee is, as already named, the model of LMX (Lee & Park, 2007). Subordinates being on a low level of LMX are said not to show anything beyond formal employment contracts with their supervisors. These subordinates develop a more traditional relationship with their leaders, who rely on his or her formal authority and position in the organization to influence the subordinate and the subordinate is expected to perform his or her job in an acceptable manner to follow rules and the directives of the leader. “The subordinate has considerably less influence over the leader and the leader gives the subordinate less freedom to use his or her own judgment. These relationships are characterized by an impersonal, distant or cold way of getting along with each other. These out-group subordinates tend to be less satisfied and perform at lower levels than in-group subordinates” (George & Jones, 2007, p.406).
Affective commitment is defined as a personal feelingthat results out of a happy state of the employees about being member of the organization and feeling good about what it stands for. They feel emotionally attached to the organization and are intended to do their best to support the organization and boost its outcomes (George & Jones, 2007).Affective commitment seems to take a great part in work performance of the employees. Research done by Reid, Allen, Armstrong and Riemenschneider (2008) was based upon a model that explores the variables of job characteristics and work experiences that together have influence on affective organizational commitment, job satisfaction, and job involvement. Their results suggested that perceived organizational support, leader-member exchange, role ambiguity and task variety are the most determining variables for affective commitment and job satisfaction of employees.
Leaders are the most direct representatives of the organization to the employees and the relation to this person is therefore determining the overall affection to the organization. Based upon the finding, that the kind of exchange with the supervisor and the feeling of being supported by him or her leads to a stronger attachment of the subordinates to the organization and affective commitment the first hypothesis states that:
Hypothesis 1) “In organizations that provide technical services with more than 100 employed members there is a positive relation between Leader-member exchange and affective commitment.“
There is also an existing relation between employees’ satisfaction with HR practices and their emotional attachment to the organizations they work for. A study done by Kuvaas in 2008 tried to examine whether and how the quality of employee-organization relationship has influences on the relationship between the perceptions of the employee on developmental human resource practices and employee outcomes. Results suggested that the quality of the employee-organization relation is critical for the relationship between HRM and employees’ work performance. The positive relation between perception of developmental HR practices and work performance for employees reporting high levels of perceived support by their organization indicates that a good relation between employees and their leaders may be necessary in order for developmental HR practices to have positive influence on work performance in return (Kuvaas, 2008). These results underline the importance for organizations to think about their practices and in case improving them to reach better employee outcomes.
Affective commitment to the organizationtakes a great part in work performance of the employees in being one of the most predicting factors for employees’ performance (Paauwe, 2004). A research done by Reid et al. (2008) showed already a significant influence of job characteristics and work experiences on affective organizational commitment, job satisfaction, and job involvement. They showed that organizational support, the used HR strategies in an organization and the kind of leader -member exchange were the most determining variables for affective commitment. Affective commitment is in return related to fewer turnovers of employees (Allen & Meyer, 1990). Literature shows that factors of affective commitment have to do with the wish to stay in the organization and the wish to work hard for the organization (De Gilder et al., 1997). Leader-member exchange is also said to influence the motivation of the employee to work harder and perform better (George & Jones, 2007).
As described in the previous hypothesisit is stated that a high LMX relationship will result in affective commitment to the organization. However, when employees are satisfied with the organizational used HR practices, the relation between LMX and affective commitment is strengthened. Peccei (2004) found evidence for a strong impactof satisfaction with HR practices on employees’ well-being.Their tested impact of employees’ satisfaction with five tested HR practices and the commitment to the organization give rise to the following hypothesis that sets these two variables into relation. Kinnie et al. (2005) also showed that commitment to the organization, including being motivated to work harder and stay with the organization, was highly related to the satisfaction with different combinations of HR practices.